The federal government has rushed for weeks to address the debilitating downturn caused by COVID-19. Along the way, small businesses seeking that help have received bad information from both local and federal officials, seen the target move on loan programs and spent a lot of time on the phone.
“The process was very simple, but it took about eight hours to complete because the website would crash or run slow,” said Alberto Piña, co-founder of Braustin Homes, which outfits and sells manufactured homes.
Piña spent a business day filling out the Emergency Injury Disaster Loan application. He is just one of many people who experienced many delays due to overwhelmed phone lines and servers.
The EIDL loan program was launched in mid-March to address businesses hurt by stay-at-home advisories and other injuries caused by coronavirus.
“The first attempt was a little painful,” said Tracie Shelton, owner of Alamo Kitchens, a shared workspace/commercial kitchen for food startups. She ultimately filled out the documents for EIDL three times because of system crashes and disappearing documents. The final time, she said, the SBA had streamlined the document, and it took 20 minutes to complete.
Shelton was grateful for the help, rattling off nearly a half dozen applications she filed to receive loans or grants from the federal government, Bexar County and private organizations in recent weeks. She needs the help because her kitchen has seen its clientele shrink from 15 to two.
“I don't want to say it's a game changer, but it's definitely the difference between being in business and not being in business,” said Ray Sims, co-owner of the Redland Cigar Club in North East San Antonio.
The EIDL advance offers as much as $10,000. It's money you don’t have to pay back regardless if you qualify for the loan.
Sims also experienced the myriad versions of the application. He attempted to apply last week only to give up when he saw the surfeit of documentation required. It was almost not worth the energy of applying, he said. But, girding himself for a bureaucratic battle Thursday, he and his co-owners were pleasantly surprised by a dramatically scaled back application.
“It took 15 to 20 minutes to complete,” he said. “I was like, 'wait, that’s it? Really? It’s over?' ”
Assuming he is finished, that is. The EIDL is supposed to parse out the advance in three business days, which some applicants said they hadn’t seen yet. Sims is skeptical.
“I am cautiously optimistic," he said, "but — given the experience in the past — I think we’ll probably have to do more.”
Many businesses, including some of these TPR spoke with, noted the many versions of bad information out there about the disaster loan as well as the PPP. The U.S. Treasury still has a document online describing the amount available for PPP as the average of two months plus 25%. In reality, it is that average times 250%.
That’s important because it is intended to provide two and a half months of payroll, ensuring business owners keep paying employees for two+ months.
The specifications around the PPP have changed since its parent CARES Act was signed a week ago. Initially the program was supposed to have had an interest rate of around 4%, then it was 0.5% and now it is 1%. Some banks have decided not to offer the loans through PPP over the low interest rate.
“We do not expect these loans to be super profitable. That's not why we're doing it. We're doing it to help our customers who are in need,” said Bill Day, vice president of communications for Frost Bank.
Frost and many other banks require a preceding relationship through a business account for companies to apply.
Regardless, there are still many unanswered questions for banks around the loan program. Banks received the interim details Thursday night around 9:30 p.m.
“While the SBA has provided the final application, it hasn’t yet provided the actual loan note — the specifics of how the loan is to be repaid,” Day said.
Also, questions around what documents are needed and how banks are to vet them still exist, and banks like Frost are working with customers to figure that out.
It is unclear how long it will take for many banks to process these loans as a result.
Much of the confusion comes from the quick pace of the loan offering.
“I mean, the law passed one week ago,” said Crystal Darby, senior business advisor at the Small Business Development Center at the University of Texas at San Antonio. “I've never seen the legal determination of how something was going to be working roll out quite this quickly.”
The PPP has about $349 billion behind it, which many expect to be exhausted before the need is, so she still advised people file sooner rather than later. And through all of this she recommends patience. Patience for banks. Patience for the government and even patience for the SBDC, where she works. They are all fairly inundated right now.
“I think we're getting about 100 calls a day, and our normal day, we probably get no more than five people, you know, asking for assistance,” Darby said.
For small business owners, who are already stressed, it may be a lot to ask for patience when the wheels are coming off their economic worlds. Especially when many see headlines with big numbers for small business splashed across news.
“The headlines are always, 'Government to give trillions to small businesses.’ That's not true. It's a great headline. It looks good. It makes us feel good. But that's not what they're giving,” said Shelton, the owner of Alamo Kitchens.
Despite the early pain of applying, the headaches of misinformation and changing goal lines, Shelton remained positive and patient because ... what other option is there?
“I don't have the luxury of being mad that somebody could have done it better,” she said. “I have to figure out what are the rules that we're playing with? How do I play in those rules and make sure I get what I need?”
Paul Flahive can be reached at Paul@tpr.org or on twitter @paulflahive.
